India’s consumer landscape is undergoing a significant transformation, with a burgeoning demand for premium and luxury goods. Historically, Indian shoppers prioritised necessity over indulgence, but the mindset is shifting. “Can I afford this?” has evolved into “I deserve this” as more consumers embrace aspirational lifestyles and seek quality over quantity.
According to Statista, the luxury goods market in India reached $7.74 billion in 2023 and is projected to grow at a steady CAGR of 1.38% until 2028. FY2024 witnessed a strong rebound in consumer spending, particularly in sectors such as FMCG, jewellery, luxury vehicles, real estate, and travel.
Private consumption—responsible for over 60% of India’s GDP—grew sharply. This was supported by rising disposable incomes, which climbed to INR 296 trillion in 2023 from INR 273 trillion in 2022.
The retail footprint of luxury brands has also expanded. Since 2023, over 6,00,000 square feet of retail space has been leased, with mall leases up 300%, high-street stores up 100%, and standalone outlets up 200%, per CBRE South Asia and PHD Chamber of Commerce. This surge highlights India’s lucrative potential as a premium market.
Drivers of premiumisation
Several factors contribute to India’s premiumisation boom. These include urbanisation, rising income levels, an expanding middle class, and the influence of digital platforms, which facilitate access to aspirational brands.
The premium segment is seeing consumption grow nearly twice as fast as price increases, underscoring how perceived value outweighs cost for today’s consumers. Entry-level luxury options from global brands and the rising popularity of e-commerce platforms have made premium products accessible even in Tier 2 and Tier 3 cities.
Luxury retail destinations like Jio World Plaza in Mumbai and DLF Emporio in Delhi have brought global and homegrown brands under one roof. International names like Versace, Tiffany & Co., and YSL share space with Indian labels such as Manish Malhotra and Abu Jani Sandeep Khosla, offering a blend of global prestige and domestic craftsmanship.
The psychology of luxury
India’s affinity for premiumisation extends beyond fashion and jewellery. The automotive sector has seen SUVs account for 60% of registrations in FY24, reflecting the demand for vehicles that offer both comfort and status. The two-wheeler segment is experiencing similar growth, driven by the popularity of power bikes among younger, aspirational consumers.
The premium housing market is also thriving, particularly in cities like Mumbai, Delhi NCR, Bengaluru, and Chennai. Luxury property sales recorded a 10% year-on-year increase during Q1 2024, underscoring the growing preference for high-end living spaces.
What makes premium products so desirable? It’s not just the quality but the emotional connection they foster. Consumers gravitate toward brands that resonate with their identity or aspirations. A luxury purchase is about more than ownership—it symbolises belonging to an exclusive club.
Successful luxury brands create what can be described as a ‘brand room’ in consumers’ minds, embedding their products as extensions of personal identity. This emotional connection often outweighs price considerations, as consumers are drawn to compelling brand stories and the allure of exclusivity.
To build this connection, brands must focus on storytelling, crafting narratives that highlight their heritage, quality, and craftsmanship. Collaborations, limited-edition releases, and influencer partnerships further amplify a brand’s prestige and desirability.
Winning strategies for premium brands
Brands aiming to capitalise on India’s premiumisation wave must deliver beyond products—they must offer experiences. Personalisation and attention to detail play a pivotal role, elevating everyday items into symbols of status.
Consider the example of Stanley’s Adventure Quencher Travel Tumbler. Originally a practical product, it became a global sensation through strategic influencer marketing and social media buzz.
TikTok videos showcasing its utility and style garnered over 240 million views, while limited-edition drops and collaborations created a sense of urgency. Such strategies demonstrate the power of exclusivity and digital storytelling in building a premium image.
Another standout example is Yeti, whose founders transformed the cooler market by positioning their products as durable, stylish lifestyle accessories. By investing in packaging and craftsmanship, even utility items can achieve cult status, turning mundane purchases into luxury experiences.
Heritage: The heart of premium brands
Heritage storytelling is a cornerstone of premium branding. A well-crafted legacy lends credibility, trust, and timeless appeal to products. Highlighting historical milestones or royal affiliations can elevate a brand’s status in the eyes of consumers.
Take Royal Brackla, the Scotch whisky brand founded in 1812. Known as ‘The King’s Own Whisky’, it was the first to receive a royal warrant in 1835.
This heritage adds layers of prestige, making it more than just a beverage—it becomes a piece of history. The brand’s experiential launch at Indian Accent in Mumbai exemplified premium marketing, combining storytelling with exclusivity.
To thrive in India’s premium market, brands must blend quality, exclusivity, and emotional resonance. Amongst the core strategies they can embrace, they should emphasise on storytelling. This is by building narratives that connect emotionally with consumers, aligning the brand with their aspirations.
They can also leverage digital platforms and engage audiences through targeted campaigns on social media and e-commerce channels. Moreover, they can focus on craftsmanship to deliver impeccable quality and packaging that justifies premium price points.
Brands can also create scarcity as a marketing tool by using limited-edition releases and exclusive collaborations to boost desirability. They can also highlight legacy by showcasing the brand’s history and associations to establish trust and prestige.
India’s luxury market is set to grow exponentially, with the number of millionaires expected to rise by 105% by 2026. Brands that understand and respond to this evolving mindset stand to reap significant rewards, transforming their offerings into symbols of status and value.
- Natasha Kharadi, assistant vice president—1862 at Only Much Louder.
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